Correlation Between Shenzhen Investment and Verra Mobility
Can any of the company-specific risk be diversified away by investing in both Shenzhen Investment and Verra Mobility at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Shenzhen Investment and Verra Mobility into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shenzhen Investment Holdings and Verra Mobility Corp, you can compare the effects of market volatilities on Shenzhen Investment and Verra Mobility and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Shenzhen Investment with a short position of Verra Mobility. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Investment and Verra Mobility.
Diversification Opportunities for Shenzhen Investment and Verra Mobility
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shenzhen and Verra is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Investment Holdings and Verra Mobility Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verra Mobility Corp and Shenzhen Investment is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Shenzhen Investment Holdings are associated (or correlated) with Verra Mobility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verra Mobility Corp has no effect on the direction of Shenzhen Investment i.e., Shenzhen Investment and Verra Mobility go up and down completely randomly.
Pair Corralation between Shenzhen Investment and Verra Mobility
Assuming the 90 days horizon Shenzhen Investment Holdings is expected to generate 0.36 times more return on investment than Verra Mobility. However, Shenzhen Investment Holdings is 2.79 times less risky than Verra Mobility. It trades about 0.21 of its potential returns per unit of risk. Verra Mobility Corp is currently generating about -0.17 per unit of risk. If you would invest 21.00 in Shenzhen Investment Holdings on August 30, 2024 and sell it today you would earn a total of 1.00 from holding Shenzhen Investment Holdings or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shenzhen Investment Holdings vs. Verra Mobility Corp
Performance |
| Timeline |
| Shenzhen Investment |
| Verra Mobility Corp |
Shenzhen Investment and Verra Mobility Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenzhen Investment and Verra Mobility
The main advantage of trading using opposite Shenzhen Investment and Verra Mobility positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Investment position performs unexpectedly, Verra Mobility can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Verra Mobility will offset losses from the drop in Verra Mobility's long position.| Shenzhen Investment vs. Jiangsu Expressway Co | Shenzhen Investment vs. Jiangsu Expressway | Shenzhen Investment vs. Zhejiang Expressway Co | Shenzhen Investment vs. Yuexiu Transport Infrastructure |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Correlations module to find global opportunities by holding instruments from different markets.
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